Correlation Between Rosenbauer International and AGRANA Beteiligungs

Can any of the company-specific risk be diversified away by investing in both Rosenbauer International and AGRANA Beteiligungs at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Rosenbauer International and AGRANA Beteiligungs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rosenbauer International AG and AGRANA Beteiligungs Aktiengesellschaft, you can compare the effects of market volatilities on Rosenbauer International and AGRANA Beteiligungs and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Rosenbauer International with a short position of AGRANA Beteiligungs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rosenbauer International and AGRANA Beteiligungs.

Diversification Opportunities for Rosenbauer International and AGRANA Beteiligungs

-0.39

Correlation Coefficient

Rosenbauer International  AGRANA Beteiligungs

Very good diversification

The 3 months correlation between Rosenbauer and AGRANA is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Rosenbauer International AG and AGRANA Beteiligungs Aktiengese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGRANA Beteiligungs and Rosenbauer International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Rosenbauer International AG are associated (or correlated) with AGRANA Beteiligungs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGRANA Beteiligungs has no effect on the direction of Rosenbauer International i.e., Rosenbauer International and AGRANA Beteiligungs go up and down completely randomly.

Pair Corralation between Rosenbauer International and AGRANA Beteiligungs

Assuming the 90 days trading horizon Rosenbauer International AG is expected to generate 1.52 times more return on investment than AGRANA Beteiligungs. However, Rosenbauer International is 1.52 times more volatile than AGRANA Beteiligungs Aktiengesellschaft. It trades about 0.08 of its potential returns per unit of risk. AGRANA Beteiligungs Aktiengesellschaft is currently generating about -0.04 per unit of risk. If you would invest  2,800  in Rosenbauer International AG on December 4, 2024 and sell it today you would earn a total of  1,060  from holding Rosenbauer International AG or generate 37.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Rosenbauer International AG  vs.  AGRANA Beteiligungs Aktiengese

Rosenbauer International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rosenbauer International AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Rosenbauer International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

AGRANA Beteiligungs

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGRANA Beteiligungs Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, AGRANA Beteiligungs is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Rosenbauer International and AGRANA Beteiligungs

The main advantage of trading using opposite Rosenbauer International and AGRANA Beteiligungs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rosenbauer International position performs unexpectedly, AGRANA Beteiligungs can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AGRANA Beteiligungs will offset losses from the drop in AGRANA Beteiligungs' long position.

The idea behind Rosenbauer International AG and AGRANA Beteiligungs Aktiengesellschaft pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.